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What Is Monthly Interest Payout in FD?

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Bajaj Finance FD

We all invest with some purpose in mind. While we might not earmark each investment with each financial goal, we know if we will need this money for a long time to come or not. We can choose investment options based on the tenor and the returns on the basis of that tenor. If you are able to allow a particular principal amount stay invested for 10 to 15 years or more and have a risk-taking capability, then you are generally advised to invest in strong equity stock or mutual funds. If, however, your investment horizon is lesser than this and you need it in a few years’ time, its best to keep the capital safe and not invest in risky avenues.  

Fixed Deposit with Monthly Interest Payout

Fixed income instruments like Fixed deposits come into play here. If you require a monthly payout for meeting recurring expenses or wish to utilize a return from one investment for another investment as a monthly deposit, go for fixed deposit with monthly payout option. This is also called the non-cumulative option where you can choose the payout period – monthly, quarterly, or half-yearly.

Monthly Interest Rate

Usually, the fixed deposit rates are for decided for an annual term. You can easily calculate the fixed deposit interest rate per month by dividing the annual rate by 12 to know the exact percentage you will be earning each month. For example, the rate offered on a 3-year FD is 10%. You can divide it by 12: (10% /12) = 0.8% to know the rate earned each month. 

Also, Read This: What Are All the Types of Bank Deposits?

Choosing the Best FD Interest Rates

You can earn a high monthly interest rate by choosing an FD which pays high interest rates. Bank FDs are currently offering 7% – 7.75% annually. You can look out for equally safe and guaranteed company FDs which easily offer 1-2% higher interest rates.

Company FDs like Bajaj Finance Fixed Deposit (FD) have interest rates from 7.72% to 8.95%. 

To understand the best interest rate for you, take a look at the table below. If you choose the tenor up to 23 months, with a monthly payout you can receive 7.72% of annual interest whereas with 36 months you can receive 8.28% of annual interest. 

Tenor in Months Minimum deposit (in Rs.) Cumulative Non-Cumulative
Monthly Quarterly Half-yearly Annual
12 – 23 25,000 8.00% 7.72% 7.77% 7.85% 8.00%
24 – 35 8.15% 7.88% 7.93% 8.00% 8.15%
36 8.60% 8.28% 8.34% 8.42% 8.60%
Special tenors scheme
15 Months 1,00,000 8.05% 7.77% 7.82% 7.89% 8.05%

Calculating Returns

You can utilize the FD monthly payout calculator (i.e., the online FD calculator) on Bajaj Finserv website. It is a free online Fixed Deposit calculator with a user-friendly interface, which uses various parameters (as per the preference of investors) to calculate the interest. Here are the steps to calculate the interest amount- 

  • Select the customer category you fall in: new customers, existing customers, or senior citizen. The rate of interest differs on the basis of the category to which you belong such as a regular customer is offered 8.6% of the rate of interest, while senior citizens are offered an additional 0.35% and the existing customer is offered additional 0.25%.
  • In the next step, you need to choose between the interest payout option i.e. cumulative or non-cumulative. This is an important step as your interest rate will change accordingly. 
  • Then you need to input the amount which you desire to invest. With Bajaj Finance you can start a Fixed Deposit with a minimum amount of Rs. 25,000.
  • The last step is to ascertain the term of your investment, which ranges from 12 months to 60 months with Bajaj Finance.

Thus, achieving a lucrative fixed monthly payout is possible with the right FD payout option and high-interest rate. 

Maximize Your Earnings from Your FD

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FD

In order to get the most from your FD, you need to understand the relation between fixed deposit interest rates and compounding. Apart from interest rates, certain fixed deposits offer substantial tax benefits as well. The article will talk at length about these schemes with examples on how to plan your investments so that you get higher returns with the same amount. Read on to take a look at a few measures that you can take to gain higher returns from your FD:

1. Go for the Cumulative Option

Deposits are of different types, cumulative and non-cumulative. Under the first option, the interest is not paid out on a regular basis, but on maturity. In the second option, the interest is paid out at quarterly, half-yearly, or annual intervals.

Here is an example. 

Bank A offers 7% on investments made in 5-year FDs. The interest is compounded every quarter for the cumulative FD. 

If you invested Rs. 1,00,000 in the non-cumulative scheme, you would be paid Rs. 7,000 each year as interest. Your total earnings for 5 years would be Rs. 35,000.

On the other hand, if you invested Rs. 1,00,000 in the cumulative scheme with quarterly compounding, your maturity value after 5 years would be Rs. 1.43 lacs.

A comparative table will show the extra gains from the cumulative option:

Option Principal

(Rs) (A)

Maturity + Interest (Rs) (B) Total gain (Rs) (A-B)
Cumulative FD scheme (1) 1,00,000 1,43,000 43,000
Non-Cumulative FD scheme (2) 1,00,000 1,35,000 35,000
Difference (1) – (2)     8000

So, your earnings would be Rs. 1.43 lacs less Rs. 1 lac or Rs. 43,000. This is Rs. 8,000 more than the non-cumulative option.

2. Invest Online

If you invest in an FD online, you get extra interest. Search for the best FD rates offered by companies and banks before you invest in them. Determine the credit rating of the company FDs and opt for companies with AAA ratings. If a company offers 8.75% interest to individuals opting for offline FDs, you get 9% for online investments.

3. Get Tax Benefits Under Section 80C

There are certain tax-saving FDs which not only offer safety of principal and stable returns, but you get a one-time tax benefit of Rs. 1.5 lacs under Section 80C of the Income Tax Act. Choose the cumulative option for higher returns.

4. Calculation of Returns

To find out how much you can earn from FDs offered by companies or banks, use the fixed deposit interest calculator online. Just enter the principal amount, tenure, and the interest rate to determine your earnings. 

Earn the Most from Your FD

You can earn higher returns from your FD, provided you follow these simple suggestions. Before investing, find out whether you need regular income or growth of capital. If you are looking for tax savings, then go for tax-saver FD offered by banks. So, do your homework, find out what you need, choose the right bank or company and watch your investments grow while you save tax!